Australia, China ink $41 billion natural gas deal

[August 19, 2009]  SYDNEY (AP) -- A 50 billion Australian dollar ($41 billion) deal for China to buy Australian natural gas shows current diplomatic tensions between the two countries will not trump their commercial interests, officials said Wednesday.

"China needs us, we need China," Trade Minister Simon Crean told Australian Broadcasting Corp. after company executives signed the largest-ever trade deal between the two nations.

The 20-year deal comes despite growing tensions between Australia and China. Beijing has expressed displeasure over Australia's recent decision to grant a visa to an exiled Uighur activist, and Canberra has voiced concerns over China's arrest of an Australian mining executive on charges of infringing trade secrets and bribery.

PetroChina Co., Asia's largest oil and gas company, has agreed to buy 2.25 million tons per year of liquefied natural gas from the yet-to-be developed Gorgon gas field off Australia's far northwest coast.

The contract gives a huge boost to the Gorgon project, which is being developed by Australian units of global energy companies Chevron, ExxonMobil Corp. and Royal Dutch Shell PLC.

The gas will come from ExxonMobil's 25 percent share of the Gorgon development, which is expected to pump up to 15 million tons of liquefied natural gas per year when it achieves full production.

The deal still requires final regulatory approval, but the government signaled Wednesday it is unlikely to be opposed on foreign investment or environmental grounds. A final decision is expected next month.

"It's a great piece of news for Australia's economy," Finance Minister Lindsay Tanner told Sky Network television. Government officials estimated it would earn Canberra around A$40 billion ($33 billion) in additional tax revenue during the life of the deal and create 6,000 jobs.

Several Australian ministers said Wednesday the spats over Uighur activist Rebiya Kadeer and Stern Hu, an Australian executive with mining giant Rio Tinto charged in China with commercial spying, would not undermine the two countries increasingly entwined economic interests.

"Inevitably there'll be the odd tension here and there -- that's unavoidable," Tanner said. "But underneath ... is a developing and very strong commercial relationship that is very important for both countries, and that relationship is in good health."

Foreign Minister Stephen Smith said Australia and China had a "complex and complicated" relationship that needed to be carefully managed.

The relationship was strong and productive based on "the fact that we are a reliable, safe and secure supplier of resources and that China's economy continues to develop," he told Parliament.

ExxonMobil senior vice president Andrew Swiger said in a statement that the company was pleased with the deal with PetroChina and hopes "that its successful conclusion will enhance the long term strategic relationship between our two companies."

On Tuesday, Smith confirmed that China recently canceled a senior minister's trip to Australia because Kadeer was granted a visa for a visit that included making speeches and attending a film festival.

China accuses Kadeer of inciting riots between Uighurs and members of the dominant Han Chinese group in Xinjiang province in July that killed at least 197 people. She denies it.

Canberra has said publicly it is concerned about Hu getting a fair trial in China. Hu, the head of Rio Tinto's iron ore operation in China, and three Chinese colleagues were charged this month with infringing trade secrets and bribery in the multibillion-dollar iron ore trade.

[Associated Press; By ROHAN SULLIVAN]

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